Diego Fabbrini is desperate to return to St Andrew's as Birmingham City's most expensive signing for five years.

Blues are close to agreeing a £1.5 million deal with Watford for the Italian playmaker.

But Gary Rowett's hopes of pulling off the club's most expensive signing since Curtis Davies signed from Aston Villa for £3.5 million in February 2011 are being frustrated by Championship promotion rivals Middlesbrough.

Fabbrini is currently on a season long loan at Boro and the Riverside club must sign a waiver to cancel the agreement if Blues and Watford are to do business.

The 25-year-old has fallen out of favour with the Teessiders as boss Aitor Karanka has preferred to use Stewart Downing in Fabbrini's preferred No.10 role.

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Boro have also snapped up Spanish forward Kike Sole, who can play in the hole, on loan. Karanka has also used Adam Forshaw in that position and admitted last week that he still wants another playmaker.

Fabbrini impressed during the early stages of his loan and has scored six goals in 26 appearances, but he has been missing in recent weeks with a toe injury.

The former Empoli and Udinese player is keen to return to Blues where he had a successful loan spell towards the end of last season and has pleaded with Boro to let him go.

He enjoyed his brief time at St Andrew's and developed a strong rapport with manager Gary Rowett.

If Watford and Birmingham can convince Middlesbrough to play ball, then the £1.5 million fee will be funded partly by proceeds from the £3.75 million sale of Demarai Gray to Leicester and partly from money that was already made available by Trillion Trophy Asia for transfers – loans and permanent – and new contracts.